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2017-2018, Domsjö Fabriker AB

Content

I. LEADERSHIP MESSAGES AND SUSTAINABILITY AT DOMSJÖ FABRIKER ..................................................... 4

A. MESSAGE FROM CEO LARS WINTER ....................................................................................................................... 4

II. ABOUT THE REPORT, REPORTING PRINCIPLES, BOUNDARY AND SCOPE .................................................. 5

A. SUSTAINABILITY DATA MANAGEMENT ..................................................................................................................... 5

III. ORGANISATION ....................................................................................................................................... 5

IV. WHAT MAKES A SUSTAINABLE BUSINESS AND A SUSTAINABLE PRODUCT? ............................................. 6

V. OPERATIONS AND PRODUCTS .................................................................................................................. 6

A. AN OVERVIEW ..................................................................................................................................................... 6 B. PRODUCTS ......................................................................................................................................................... 7

VI. DESCRIPTION OF THE COMPANY’S VALUE CHAIN .................................................................................... 9

A. SUPPLY CHAIN PROFILE.......................................................................................................................................... 9 B. SUSTAINABLE FORESTRY ...................................................................................................................................... 10

VII. GOVERNANCE STRUCTURE ..................................................................................................................... 10

A. BOARD OF DIRECTORS ........................................................................................................................................ 12 B. SUSTAINABILITY FRAMEWORK .............................................................................................................................. 12

VIII. THREE STEPS OF THE ADITYA BIRLA GROUP’S SUSTAINABILITY MODEL ................................................ 14

A. RESPONSIBLE STEWARDSHIP ................................................................................................................................ 14 1. Our Approach to Responsible Stewardship .......................................................................................... 14

B. STAKEHOLDER ENGAGEMENT ............................................................................................................................... 14 1. Our approach to Stakeholder Engagement: ........................................................................................ 14 2. Overview of relationships with key stakeholders: ............................................................................... 14

C. FUTURE PROOFING ............................................................................................................................................. 16 1. Risks and opportunities for cellulose business ..................................................................................... 16 2. Innovation ............................................................................................................................................ 18

IX. ASSESSMENT OF MATERIAL TOPICS ....................................................................................................... 18

A. THE SIGNIFICANCE OF MATERIALITY ASSESSMENT...................................................................................................... 19 B. PROCESS FOR MATERIALITY ASSESSMENT: ............................................................................................................... 19 C. SUMMARY OF MATERIALITY TOPICS ...................................................................................................................... 20

X. PERFORMANCE DISCLOSURES OF KEY SUSTAINABILITY ASPECTS ........................................................... 22

A. ASSESSMENT REGARDING DOMSJÖ FABRIKER’S OPERATIONS AND SWEDEN’S ENVIRONMENTAL QULITY OBJECTIVES ............... 22 B. EMISSIONS, EFFLUENTS AND WASTE....................................................................................................................... 24

1. Emissions to water ............................................................................................................................... 24 2. Effluents of water ................................................................................................................................ 24 3. Emissions to air .................................................................................................................................... 25 4. Solid waste ........................................................................................................................................... 26

C. ENERGY ........................................................................................................................................................... 26 D. MATERIALS ...................................................................................................................................................... 28

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E. ECONOMIC PERFORMANCE .................................................................................................................................. 28 F. EMPLOYMENT ................................................................................................................................................... 29 G. TRAINING AND EDUCATION.................................................................................................................................. 29 H. OCCUPATIONAL HEALTH AND SAFETY .................................................................................................................... 30

XI. PUBLIC RELATIONSHIP EVENTS .............................................................................................................. 31

XII. GRI CONTENT INDEX .............................................................................................................................. 33

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I. Leadership Messages and Sustainability at Domsjö Fabriker

A. Message from CEO Lars Winter We have left yet another financial year behind us from which we have many positive achievements to highlight and remember. We have introduced our new cellulose product Domsjö Cellulose Ultra on the market with excellent receptions. We have inaugurated our new packaging line for lignin in 25 kilo bags and started approaching new customer segments. We have also made good progress with our third main product, bioethanol, for which we have both solved the odour problem and after the autumn production stop we recorded a considerable production increase. The development of our products, todays’ as well as tomorrows’, continues to have a high priority. Our ambition in the biorefinery is to utilise as much as possible of the sustainable raw material, i.e. we want to make more from the tree.

The trees or the wood raw material have gained focus. There are a lot of discussions around todays’ wood harvesting in Sweden. We know that the annual growth is considerably higher than what is harvested. However, the excessive growth is currently mainly on areas where the harvesting is prohibited for different reasons. I am convinced that higher volumes can be cut without reducing the environmental ambitions but we will need to find ways to either increase the growth in the areas in use or start harvesting in the areas where there are restrictions today. This is a very important topic for the future of Domsjö Fabriker and not least for the transition to a sustainable bioeconomy which so many are talking about. We know that the resources on earth are limited and hence it is important to use the opportunity offered by our forests. Everything which is produced from fossil based oil can be produced from forest raw material. However, it is important that the prerequisites for forest based activities are the right ones.

We are very proud and happy for receiving the Swedish industries’ equality award. During many years we have been striving for increased gender equality in order to utilise the advantages it adds to our organisation. We have come a bit on this road and today more than 20 per cent of our employees are women, every fourth manager is a woman and more than half of the management team are women. We don’t believe in employing people based on gender but in finding the right person for the right position, irrespectively of gender. It is all about changed attitudes and today it is self-evident and natural that we have women in all our departments. The most important thing is to be an attractive employer for both genders so we get equally many women as men applying for our positions. The selection will then lead to an equal distribution between the genders.

During the financial year we have been working intensively with our permit application. It is now investigated at the Land and Environment Court and we have been called to a main hearing on site in Domsjö in October. We will then receive decisions on valid conditions for our operations and when these conditions have to be fulfilled. In our application, according to me, we have in a very good way shown how our operations affect our surroundings and which measures we plan to take. I hope that we will receive decisions which are reasonable due the environmental influence we have on our neighbourhood.

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II. About the report, reporting principles, boundary and scope The sustainability report for Domsjö Fabriker AB (from here on called Domsjö Fabriker) for FY18 (April 2017 – March 2018) is made annually and follows the principles of stakeholder inclusiveness, materiality, sustainability context and completeness. This sustainability report is made as a separate document from the financial statement and is produced in line with the international standards of the Global Reporting Initiative (GRI). This report has been prepared in accordance with GRI standards: Core option.

The boundary and scope of this report includes Domsjö Fabriker, for reasons of coverage within direct control and availability of data. For further information regarding the information in this report please contact Monika Backerholm, Communication Manager.

http://www.domsjo.adityabirla.com http://www.adityabirla.com

A. Sustainability Data Management Domsjö Fabriker has a data management system together with the rest of Aditya Birla Group (ABG) for continuous tracking of key disclosures. One module is configured for indicators around the Global Reporting Initiative (GRI) requirements and will capture all GRI Standard indicators. This will help monitoring these indicators and at a later stage publishing the sustainability report in line with strategy of Aditya Birla Group.

Domsjö Fabriker works systematically with sustainability data management through different management tools. All kinds of incidents (health, safety, environment, social, labour and legal) are tracked so that remedial actions can be taken. The tools assist to conduct investigation, root cause analysis and corrective-preventive action plans.

III. Organisation Domsjö Fabriker is located in Örnsköldsvik and is base of both operations and headquarters. Domsjö Fabriker has only one supplier of wood raw material, Domsjö Fiber, which is partly owned by Domsjö Fabriker together with Övik Energi AB. Domse Latvija is Domsjö Fabriker’s subsidiary in Latvia with 14 employees. Domse Latvija procures wood, primarily from the Latvian market.

Domsjö Fabriker is a part of Aditya Birla Group since 2011. Aditya Birla Group is an expanding Indian conglomerate with roots in the Indian textile industry. The business includes production of viscose fibre, aluminium, copper, cement, chemicals, fertilisers and isolators as well as running retail businesses, etc. The turnover is 41 billion USD, and the group has around 120,000 employees worldwide.

The Aditya Birla Group is the world’s largest manufacturers of viscose fibre, and is involved in the entire textile value chain, from the production of viscose to the finished cloth and apparel. Domsjö Fabriker is one of four cellulose plants in the Aditya Birla group. Two are situated in Canada and one in India. The group has development laboratories and pilot equipment which enables simulating all industrial processes, from forest to fashion.

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IV. What makes a sustainable business and a sustainable product?

According to Aditya Birla Group, a sustainable business is one that can live within the constraints of a “two degree sustainable world”. A sustainable business can reduce its impact on the externalities, as required by the shrinking legal space within which it must operate, as well as one that can adapt to external factors that are driven by global megatrends which will inevitably affect it.

Domsjö Fabriker is a biorefinery with a wide range of products, all based on renewable and traceable raw materials. Our products can replace those fossil-based in the textile and chemical industries and thereby contribute to strengthening the bioeconomy and reducing the environmental impact of our operations and products.

V. Operations and Products

A. An overview ”We have a responsibility for the next generations. We must make sure that our common resources are used with a holistic view. There has to be a balance in the consumption of raw material and the resources given to us by Mother Nature. As one of the world’s leading biorefineries we are a forerunner and a model how we can contribute to developing the bioeconomy so many talk about and want to achieve. We want to and will be a force in this development also in the future”. Source: Lars Winter, CEO.

Domsjö Fabriker has over the year transformed and developed into a biorefinery where multiple products using the various components of wood, cellulose, hemicellulose and lignin are produced.

Domsjö Fabriker is in the beginning of a textile value chain ending with production of apparel using natural fibres. The products are made from renewable raw material and the processes are designed to minimise the environmental impact of the products along the value chain. Sustainable forestry and “making more from every tree” is crucial to keep this value chain sustainable.

What is a biorefinery? EuropaBio – the European Association for BioIndustries, defines biorefineries as follows:

“Biorefineries exploit all of the elements of biomass, recycling secondary products and wastes of the reaction into valuable products, even producing the very energy which powers the process itself. In this respect, the concept is analogous to a petroleum refinery, where oil is refined into many marketable products including chemicals, energy and fuels. However there is a crucial difference: biorefineries are based on the use of renewable materials as a feedstock whereas today’s petroleum refineries are based on the use of non-renewable materials such as fossil fuels.”

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The annual wood consumption is 1.3 million m3sub of spruce and pine. Most of it originates from northern Sweden but a smaller part is imported from the Baltics and other countries in northern Europe. Domsjö Fiber is responsible for all our wood supply to the biorefinery which is made through contracts with forest owners and forest owners associations nationally as well as internationally. The wood is transported by sea, road or rail. The production process results in high quality and environmentally sound products. All wood supplied is under ABG Wood Fibre Sourcing Policy and audited according to Chain of Custody for PEFC™ and FSC®.

The logs are debarked, chipped and fed into the digesters together with cooking chemicals. The bark is incinerated and provides energy as steam, electric power and district heating. After cooking the cellulose is washed and bleached using only hydrogen peroxide. The bleach plant is the world’s only chlorine free and closed loop bleaching plant. The bleached cellulose is finally dried and shipped. The entire process, from tree to finished cellulose bale, takes about 40 hours. During cooking, hemicellulose and lignin are dissolved. The hemicellulose is fermented and distilled to bioethanol. The lignin becomes lignosulfonate during the cooking process and is dried and packed in either small or large bags. The cooking chemicals are recycled in recovery boilers, providing steam and electric power used in the processes. In figure 1 the process in Domsjö Fabriker is shown.

Figure 1: The unique process in Domsjö Fabriker

B. Products Speciality cellulose, lignin and bioethanol are the main products. The renewable raw material, the company’s commitment to sustainable sourcing of wood and the unique process minimize the products’ environmental footprint. In figure 2 the proportion of products and different applications are shown.

a) Speciality Cellulose The specialty cellulose, based on softwood, has proven its excellence during many years in very demanding applications such as pharmaceutical tablets, sausage casings and filaments. The main markets are Europe, Indonesia, India and China. The cellulose from the unique process is tailor-made to meet customers’ requirements. Domsjö Cellulose is bleached in a unique, totally chlorine-free and

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closed loop bleach plant, resulting in high bright cellulose. Domsjö Fabriker has a long-term commitment to providing superior cellulose of high quality, expertise and reliability. The production of speciality cellulose during the fiscal year (FY18) was 200,234 tonnes.

b) Lignin The unique process gives a modified lignin, i.e. lignosulfonate. It is used as a dispersant agent or as a binder in various applications such as agrochemicals, animal feed and at oil and gas drilling. The most common application area is admixtures for concrete. The lignin improves the concrete’s flow properties and therefore reduces the need for cement in concrete structures while retaining the strength characteristics. Adding lignin to concrete is a favour to the environment as cement production emits large amounts of carbon dioxide. Estimates show that adding one kilo of lignin to concrete reduces carbon dioxide emissions from cement production by 20 kilograms. The annual lignin capacity at Domsjö Fabriker is 120,000 tonnes, which, if all used in concrete, would reduce the need for cement equivalent to 2.4 million tonnes less carbon dioxide emission from the cement industry. This corresponds to the emissions from more than 600,000 medium sized cars each driving 15,000 km a year. The lignin from our process is dried using biogas from the biological treatment process and shipped to customers in over 60 countries around the world. The production of lignin for FY18 was 85,351 tonnes.

c) Bioethanol The unique cooking process releases hemicellulose as sugar which is fermented in the ethanol plant. In the fermentation process, both bioethanol and carbon dioxide are produced. Carbon dioxide is sold and used in carbonic production. The bioethanol is mainly used as raw material for production of green chemicals. Ethanol is a good solvent and is therefore also used in many areas like water based paints, pharmaceuticals, perfumes, cleaning products, paints and inks. Some applications for ethanol are as coolant in heat pumps, in screen washer fluid and in the paint industry. Ethanol is an interesting raw material for the chemical industry, as it replaces oil as raw material for different kinds of plastic and chemicals. In the chemical industry’s shift towards more renewable raw materials, ethanol from forest biomass can play an important role. The bioethanol is delivered to a customer on site producing green chemicals. The production of ethanol was 16,466 tonnes.

Figure 2: Products from Domsjö Fabriker

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VI. Description of the company’s value chain

A. Supply chain profile The large part of the supply chain is in Europe and major raw materials procured are shown in the table below, table 1. Being a major production unit, environmental responsibility is crucial in each part of the value chain. Figure 3 shows Domsjö Fabriker’s value chain.

Figure 3: Domsjö Fabriker’s value chains from wood to end-products

Domsjö Fabriker engage with the value chain through innovation, knowledge sharing, responsible sourcing and use unique processes for production of environmentally sound products from renewable raw material. Customers are supported by providing technical support how to use the products and by understanding customers’ needs now and in the future.

Aditya Birla Group has a supply chain and procurement policy which stresses the importance of using alternative materials and renewable energy, water stewardship, safety, health, respect for human rights and elimination of child and forced labour across the value chain which Domsjö Fabriker is committed to. Domsjö Fabriker uses biobased raw materials to produce its products and heat energy. There is no lack of water where Domsjö Fabriker is located and the quality of the water is good. Health and safety is always on top of the agenda and targets are set and monitored. Chemicals and other materials are mainly purchased from domestic suppliers or from suppliers mainly located in Western Europe, see table 1 below.

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Table 1: Supply Chain Data Raw material procured Countries of origin Type of suppliers

Wood Sweden, countries in northern Europe

Forest owners and Forest owners associations through Domsjö Fiber AB

Sulphur Sweden Trader Chemicals (caustic, lime, etc.) The Netherlands, Sweden Producer Packaging material Sweden, Czechia, Slovakia Producer Fuels (diesel, FO etc.) Sweden Producer

B. Sustainable forestry A responsible managed forestry is crucial for a sustainable forestry and a sustainable value chain and therefore all incoming wood sources are based on ABG’ Fibre Sourcing Policy and controlled under an audited Chain of Custody according to the requirements in the FSC® and PEFC™ standards. The wood originates from forest land which does not require irrigation, it’s traceable and does not come from any illegal sources. 80-90 % of the wood consumed originates from Sweden and is mainly from local areas. The forestry is nontoxic and does not require agricultural land or irrigation.

“The forest and its products are part of the solution to the climate and environmental issues of our time as more and more see the opportunities with bioeconomy instead of an economy largely based on fossil raw materials. Through the transition to a resource efficient economy based on renewable raw materials produced through sustainable forestry our collective carbon footprint is reduced. Forest industry products are refined in many different areas and often replace materials and products made from fossil raw materials. In addition to a high degree of refining, important jobs are also created.”

Further, the Aditya Birla Pulp and Fibre Business as a whole has partnered with Canopy, an international non-profit making environmental organization dedicated to the protection of forests and biodiversity. Canopy works with businesses to develop innovative solutions to make their supply chains more sustainable and to help protect the world’s endangered forests. Aditya Birla is working with Canopy on the “Fashion Loved by Forests” campaign. In line with this initiative, Aditya Birla announced its Wood Sourcing Policy in 2015 and works closely with Canopy to ensure that wood from sustainable forestry is used by the Birla Cellulose brand. Domsjö Fabriker has PEFC™ and FSC®-certifications regarding Chain of Custody which mean that wood from sustainably managed forests are used to produce sustainable and environmentally responsible products.

VII. Governance structure Domsjö Fabriker is part of the Aditya Birla Group which is an expanding Indian conglomerate with roots in the Indian textile industry. The Aditya Birla Group is the world’s largest manufacturers of viscose fibre, and is involved in the entire textile value chain, from the production of viscose to the finished cloth and apparel. Domsjö Fabriker is one of four dissolving cellulose plants in the Aditya Birla group. Two are situated in Canada and one in India. The group has R&D laboratories and pilot equipment which enables simulating all industrial processes, from forest to fashion.

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Approximately one out of four viscose clothing items in the world is produced using viscose fibre from Aditya Birla. Four viscose fibre brands are produced; Birla Viscose, Birla Modal, Birla Excel, Birla Purocel. The products are known as Birla Cellulose. Viscose fibre is not only used for different kinds of clothing, from fashion to work clothes, but also for home textiles and non-woven use, such as personal hygiene and medical purposes. Liva, a cloth made from viscose fibres in a by ABG controlled manner is also marketed in co-operation with several brands of textile manufacturers.

Domsjö Fabriker is committed to Aditya Birla Group’s Corporate values, principles and policies. The principle keystones and values are the core within the Group and implemented in Domsjö Fabriker with a Swedish approach, taking government laws and institutions into account.

Keystones:

• Employees: People build the Group’s success. • Customer: The customer is the focus of every activity. • Environment, health and safety: Respect for the environment, health and safety is part of

everything done.

Group values:

• Integrity : Acting and taking decisions in a manner that is fair and honest. Following the highest standards of professionalism and being recognised for doing so. Integrity for us means not only financial and intellectual integrity, but encompasses all other forms as are generally understood.

• Commitment: On the foundation of Integrity, doing all that is needed to deliver value to all stakeholders. In the process, being accountable for our own actions and decisions, those of our team and those on the part of the organisation for which we are responsible.

• Passion: An energetic, intuitive zeal that arises from emotional engagement with the organisation that makes work joyful and inspires each one to give his or her best. A voluntary, spontaneous and relentless pursuit of goals and objectives with the highest level of energy and enthusiasm.

• Seamlessness: Thinking and working together across functional groups, hierarchies, businesses and geographies. Leveraging diverse competencies and perspectives to garner the benefits of synergy while promoting organisational unity through sharing and collaborative efforts.

• Speed: Responding to internal and external customers with a sense of urgency. Continuously striving to finish before deadlines and choosing the best rhythm to optimise organisational efficiencies.

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A. Board of Directors The board of Domsjö Fabriker AB consists of:

• Kumar Mangalam Birla, Chairman • Dilip Gaur • Vinod Tiwari • Lars Winter • Andreas Hadjimichael • Ronny Hellström (ER) • Maria Wallenius (ER)

B. Sustainability Framework The sustainability vision and framework has been developed at the Aditya Birla Group level and cascades down to different businesses and plants. The main components of the framework include a sustainability vision, policies and standards to be applied by group companies. The purpose of the framework is to proactively build relationships with stakeholders, monitor performance against various standards, and drive results to ensure long-term sustainability of the organization. The framework is driven by the Aditya Birla sustainability model which consists of three vehicles for sustainable growth: responsible stewardship, stakeholder engagement and future proofing, please see figure 4 below. Domsjö Fabriker uses the framework to create sustainable business process.

Figure 4: Aditya Birla sustainability framework

During 2017 Domsjö Fabriker was audited and certified according to the international environmental standard ISO 14001:2015. Other implemented standards are ISO 9001 (Quality), ISO50001 Energy and PEFC™- and FSC®-standards (Chain of Custody for wood material). All employees have been

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educated about the standards as well as about environmental issues in general. The working process of the management team has been revised to widen the scope according to the new environmental standard and Aditya Birla sustainability framework.

During the fiscal year self-assessments to confirm and compare the process with the Sustainability framework has been conducted. Work has been done regarding water, wastewater, waste and energy. There is a need for development of more sustainable solutions for waste handling as well as wastewater streams and effluents. Questions regarding emissions are highlighted due to the present environmental permit application.

The governance structure for implementation of sustainability consists of three layers. Domsjö Fabriker has a Core Committee at Pulp and Fibre Business level which is responsible for taking sustainability into the company’s business strategy. The Apex Sustainability Committee, with representatives from all units in the pulp and fibre business, is primarily responsible for implementation of the framework, see figure 5 below. The Apex Sustainability Committee delegates responsibilities to Unit Level Sustainability Committees, Roadmap Task Forces and Stakeholder Engagement Committees for implementation of various sustainability initiatives in line with the group strategy and framework. The Unit Sustainability Committee is being established and will be the link to management of Domsjö Fabriker.

Figure 5: Sustainability governance structure for sustainability data management

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VIII. Three steps of the Aditya Birla Group’s Sustainability model

A. Responsible Stewardship “Create a framework to move us towards international standards and mitigate our impacts on ‘Externalties’”. Source: http://sustainability.adityabirla.com

1. Our Approach to Responsible Stewardship Responsible stewardship is essential to ensure long-term growth and sustainability. As part of the Aditya Birla Group, Domsjö Fabriker‘s motto for responsible stewardship is “making our operations capable of meeting global standards and expectations”. As an organization using wood as raw material and being at the beginning of the value chain of many consumables like textiles, it is important to understand the responsibility to provide environmentally sound products.

B. Stakeholder Engagement “Gain knowledge to understand how fast ‘External factors’ will change and when disruption will occur as we approach a two degree world.” Source: http://sustainability.adityabirla.com

1. Our approach to Stakeholder Engagement: Aditya Birla Group has identified stakeholder engagement as one of the key aspects of its sustainability strategy. The Group has a stakeholder engagement policy and a technical standard to incorporate stakeholder engagement into governance. The aim is to develop a relationship of trust, communication, transparency and common interest with key stakeholders. An overview of how Domsjö Fabriker engages with key stakeholders follows.

2. Overview of relationships with key stakeholders: “Together with our stakeholders, we want to make a difference. We want to improve existing operations and create new application fields for the growing forest, thus contributing to reduced environmental impact, increased growth and more job opportunities. The products we produce replace all products that would otherwise be produced by fossil oil. We can refine the renewable forest raw materials into valuable products while also reducing the negative impact that fossil oil has on the environment and climate.” Source: http://www.domsjo.adityabirla.com

a) Employees Employees are the company’s greatest asset. Domsjö Fabriker strives to create a working environment where employees are passionate to come to work each day. Consistent and long-term investments in the enhancement of skills and career development are done.

Domsjö Fabriker engages with the employees in various ways such as employee satisfaction surveys, Working Environment Committee meetings where employees are represented by unions, family days, health activities, art club, vacation foundation and staff foundation.

b) Customers Domsjö Fabriker works closely with customers to identify their needs (short-term and long-term) through customer surveys and efficient feedback. The R&D Team (DomInnova) drives innovation by encouraging, capturing and implementing ideas for new products. Product development is often

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done together with existing and potential customers as well as in networks with relevant companies, institutes and universities.

Customers are involved by a number of means like one-to-one meetings, customer surveys, customer audits at our mill, product development initiatives and a regular dialogue on product delivery and logistics.

To be able to create sustainable businesses Domsjö Fabriker has an anti-corruption policy regarding personnel representing Domsjö Fabriker in contact with different stakeholders.

The Sustainable Apparel Coalition has developed the Higg Index as a suite of self-assessment tools for companies in the value chain for textile products, for identification of environmental and social sustainability hot spots and improvement opportunities. The Higg Index is a starting point of engagement, education, and collaboration among stakeholders in advance of more rigorous assessment efforts. Domsjö Fabriker applies the Higg Index to its operations and collaborates with customers in the textile and apparel industry, making use of this tool.

c) Local Communities Domsjö Fabriker is located in Örnsköldsvik, Sweden. The local community is engaged through:

• Transparent communication through media to inform local communities on any changes in the business, anything from temporary noise to new production lines and products.

• Consultations with local residents whenever a change in the business requires a notification according to Seveso Directive or permit under the Environmental Code.

• Support programs for schools. • Process of attending to complaints from local bodies. • Meetings with municipality administration and other authority bodies. • Engagement in the local Chambers of Commerce. • Engagement in the Örnsköldsvik Industry Group in cooperation with other local industry

related companies. • Engagement in the Swedish Forest Industries association • Cooperative relation with Företagsutbildarna (business trainers)

d) Government Domsjö Fabriker strictly adheres to Swedish laws and maintains a healthy relationship with the government authorities through the following means:

• Yearly visits by Government authorities to review our environmental, health and safety performance and compliance with agreed conditions.

• Continuous dialogue with authorities regarding the operations. • Publish reports and statistics regarding performance status of the plant to relevant

authorities. • During FY18 Domsjö Fabriker has applied for a new environmental permit that has meant a

meaningful dialogue with authorities on different levels, both locally, regionally and state.

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e) Neighbouring industries Collaboration with neighbouring industries and working together towards common goals is important. Contacts with industrial neighbours are done in association meetings discussing safety, environment, logistics and community emergency services issues and jointly held emergency exercises. Domsjö Fabriker is together with neighbouring industries parts of an energy cluster. It secures a stable production and takes advantage of every member’s possibility to produce and consume different types of renewable energy. Even the local community gets a part of this for electricity and heating.

f) School contacts The youths are potential future colleagues. Therefore it is important to be active with different school contacts. Interns from both upper secondary schools and universities are welcome and are taken care of by educated mentors.

Domsjö Fabriker is also active in the national project “Skogen i Skolan” (“Forest at School”) with focus on education and information for students as well as teachers and future teachers. One appreciated activity is the “Forest days” organised together with other forest industries. The students spend one day in the forest where they are taught about sustainable forestry as well as forest based products of today and tomorrow. Together with other local participants, Domsjö Fabriker co-hosts a nature and technology event for students. To this annual event all students in the municipality are invited to work on a technical task and then participate in a one day event to present and compete with their projects.

Collaboration has also started with two classes from Sörliden upper school. Together with the technology and management consultant Knightec, students are visited a number of times during the year and a contest is held where the winning group gets a short summer job at both companies. The purpose of the collaboration is to increase students’ interest in technology as well as to increase long-term ethnic and cultural diversity.

C. Future proofing “Modify our strategic business plan to include additional mitigation and adaption to changes in the ‘External factors’.” Source: http://sustainability.adityabirla.com

1. Risks and opportunities for cellulose business Future proofing is the process of anticipating risks and opportunities that might become more significant in the future as well as developing systems and processes to address these in advance. Future proofing is a key pillar of the sustainability strategy. The following are key risks and opportunities addressed as part of the future proofing efforts, see table 2.

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Table 2: Summary of risks and opportunities Risk / Opportunity Present / Future scenario The response Dependency on wood raw material

The pulp industry is dependent on forests for its raw material. Ensuring a continuous supply of raw material is essential for the business. However, this is only possible if forests are managed in a sustainable manner and forest resources are not reduced over time. Today there is an intensified competition of wood in the area.

Domsjö Fabriker has a certified Chain of Custody according to PEFC™ and FSC® and wood is only procured from legal and traceable sources. The biorefinery is situated nearby sustainably managed forests but to meet coming competition there is a need to expand the supply of wood. In addition a constant work to optimise material usage, including wood, is going on to generate more value.

Energy intense operations

Pulp production is an energy intense process and there are risks of energy costs impacting bottom line as well as increasingly stringent regulations due to climate change.

Domsjö Fabriker is almost self-sufficient regarding energy as about 96 % of the primary energy consumption comes from renewable fuels, i.e. black liquor, solids and biogas. Continued efforts are going on to explore how the share of fossil fuels in the energy mix can be further decreased. In addition, opportunities to reduce energy usage through efficiency initiatives are ongoing. Optimizing systems for heat recovery from waste heat generated in the manufacturing process, e.g. heat exchangers for process streams, is ongoing. Due to the cold climate Domsjö Fabriker is less dependent on cooling systems.

Water intense operations

The pulp industry is a water intense industry. To ensure a continuous supply Domsjö Fabriker needs to be aware of the recipient capacity.

There are ample water resources, which are not impacted by the production. The condition of the recipient water is followed by a thorough inspection program and by continuously monitoring effluents.

Regulations related to effluents, emissions and waste discharge

Pulp production requires large quantities of water and cooking chemicals. Chemical recovery causes emissions to air. There is a need to minimize the environmental impact of emissions to air and water effluents as well as of waste generation, but also to prepare for any future changes in regulations.

Water usage, emissions to air and water effluents are continuously monitored. The aim is to maximise recovery in the process. Due to a unique closed loop bleach plant, water consumption is minimized in the process. Chemicals are as far as possible recovered in the process. There is a constant strive to minimize waste by turning the wood components cellulose, hemicellulose and lignin into products.

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Human resources management

A large work force is required for the biorefinery. There is a steady need for new employees for retirement replacements.

Domsjö Fabriker is involved in a number of local initiatives. One example is vocational training programs with students from local schools. There is a strong in-house learning and development program to ensure continuous learning and knowledge transfer among the employees.

Utilising our sulphite process

Thanks to the unique sulphite process, Domsjö Fabriker is able to produce a great spectrum of bio-based products.

Domsjö Fabriker continues to work on product innovations, as well as process innovation for more efficient use of existing resources.

Apart from addressing these risks and opportunities, Domsjö Fabriker emphasizes innovation to identify solutions for future challenges, building a better tomorrow already today.

2. Innovation Development and innovation are central to the organisation and part of the culture. Our R&D Team DomInnova acts as an innovation catalyst with the task to encourage capture and process ideas coming both from internal and external contacts. Development, innovation, and to some extent research, is conducted with the aim to increase the value created in the cellulose process but also for lignin and hemicellulose based products. DomInnova has developed an external network of companies, universities and institutes giving access to advanced laboratory, pilot equipment and analytical instruments. Important partners are MoRe Research and RISE but DomInnova also works closely with research teams within the Aditya Birla Pulp and Fibre business.

The Aditya Birla Group has several facilities dedicated to research for pulp and fibre products and applications along the value chain of the business. These research centres are hubs of innovation, contributing to technological advances that bring versatility to the products and their applications and are important assets for future proofing of the business.

“Development and innovation play a key role in Domsjö Fabriker’s activities. DomInnova serves as Domsjö Fabriker’s innovation engine with the task of encouraging, capturing and processing ideas from both national and international research organizations as well as ideas in the organization. Thanks to a flexible and dedicated organization, we are able to take care of development, innovation, and to some extent research at or in the vicinity of our own premises.” Source: http://www.domsjo.adityabirla.com

IX. Assessment of material topics During production precautionary actions are always considered and taken to minimize the environmental impact and use of resources. This is also something that is a keystone in the environmental management system ISO14001 to include continuous improvements and a life cycle perspective of the operations and activities. Domsjö Fabriker has a system for collecting, handling and closing non-conformities regarding environment and health & safety.

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A. The significance of materiality assessment The Aditya Birla Group has developed a sustainability model to achieve its sustainability vision. Responsible Stewardship, Stakeholder Engagement and Future Proofing are identified as key components of this framework, and to be practiced by the Group’s businesses. The second step defined by the model is Stakeholder Engagement. The goal for Domsjö Fabriker is to build strong relationships with stakeholders and key technical experts. By doing so it is expected to learn which trends are most likely to affect the businesses in the future and how they might change. In order to succeed, it is vital that materiality assessments are carried out as a part of the stakeholder engagement to allow for identifying priority risks and opportunities linked to the business. This allows Domsjö Fabriker to focus the resources and monitoring on sustainability aspects most relevant to the business and to stakeholders.

B. Process for materiality assessment: The first materiality assessment was carried out 2016 and the second 2017 but from there on assessments will be done every second year. In 2017 a workshop for management with representatives from each department including environment, health and safety, process and operations, supply chain, finance and human resources was carried out.

The input comes from stakeholder assessment, environmental topics and from earlier materiality assessments. Additional issues identified by the participants were collated and ranked based on the risk assessment according to stakeholder requirements and expectations. In figure 6 the result from the materiality assessment is shown.

Figure 6: The latest Materiality assessment

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C. Summary of Materiality Topics The following topics were identified as input in the Materiality Assessment for Domsjö Fabriker:

Environment

Leading in sustainability, contributing to enhanced bioeconomy The products can make a difference in a bioeconomic concept. An opportunity to promote green economy and broaden market.

Reduced energy consumption Domsjö Fabriker is a biorefinery, which means that renewable raw materials (biomass) generates many products as well as meeting energy requirements. Work is continuously done to be self-sufficient regarding energy by reducing the energy consumption and producing energy from renewable sources. The work is done according to ISO 50001.Targets for different individual processes are set and monitored.

Reduced fossil dependence and wood Climate change is a global issue which needs to be addressed. About 4% of the energy is fossil based. Wood is the main raw material and 80- 90 % is bought locally. The global climate agreement was approved by world leaders in Paris in 2015. Its goal can be achieved through increased use of existing renewable products while new materials and products are developed to replace fossil-based products. This emphasizes the importance of forests as one of the solutions to the climate problem. It is also fully in line with the development of the biorefinery.

Reduce odour and no disturbing noise The ambition is to have as little impact as possible on local community. Potential impacts include noise and smell and therefore these disturbances are monitored and managed to minimize impacts.

Legal conformity Domsjö Fabriker complies with environmental regulation and invests continuously in improving systems and processes for disposal or treatment of waste and effluents as well as the environmental management. Three fines regarding emissions of oil were paid during FY18 with the total sum of approximately 300 000 SEK. Domsjö Fabriker exceeded the permit for noise during 2017 and now a project has started to remediate this.

Low air emissions and water effluents Measures are continuously taken to ensure compliance with conditions set by authorities regarding air emissions and water effluents. To minimize the environmental impact, water and chemicals are as far as possible recycled in the process. Air emissions and water effluents are followed up and deviations are corrected.

Water usage Water is an issue in many places around the world but Domsjö Fabriker is situated at Moälven River with plenty of water, giving a favourable situation concerning water consumption. The treated water is returned to the river. There is no significant impact on the Moälven River due to the water withdrawal. Although there are no significant risks with respect to water for Domsjö Fabriker, it is regarded as a material aspect for the Aditya Birla pulp and fibre business. The water usage is monitored and reported.

Reduce waste Domsjö Fabriker reduces the amount of waste by recycling residues by returning streams to the process. Active development work is going on to find ways to utilize the waste and turn it into products. The amount is monitored and reported.

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Soil contamination The industrial site is contaminated due to the industrial history of previous activities. The situation regarding soil contamination is thoroughly documented. Any activity or investment has to take the impact on soil and its impact towards society into account.

Forestry Wood as a renewable natural resource is an amazing asset and can replace many products made from cotton or oil. The raw material for the main product specialty cellulose is made of spruce and pine. 80- 90 % originates from Sweden and mainly from local areas, the rest is imported. All the wood can be traced back to its source and the forestry is done according to forestry laws in each country. Domsjö Fabriker is Chain of Custody certified and purchases wood that conforms to the requirements in the FSC® and PEFC™ standards. Emergency management Large amounts of hazardous chemicals are handled in the process which classifies the company as a high risk one. To minimize these risks a safety management system according to European legislation (Directive 2012/18/EU) is implemented.

Quality

Correct documentation, customers and suppliers Transparency is important to create credibility and correct documentation at the right time and place is self-evident.

Payment security Economic success for Domsjö Fabriker goes hand in hand with the economic success of stakeholders. The aim is to contribute as much as possible to the local economy by procuring materials from local suppliers.

Clear long term strategies The strategies have a close connection to the goals and are formed to be easily summarized and communicated throughout the organization. The strategies describe how targets shall be fulfilled as well as the future direction of the company.

Product quality and delivery reliability The phrase “the right product at the right time” is key. In case of quality, production or transport deviations every effort is taken to avoid further problems. Continuous customer contacts as well as personal visits and surveys keep information about their customers’ needs updated.

Need for certified wood Domsjö Fabriker and its wood procurement subsidiary, Domsjö Fiber, are since 2015 Chain of Custody certified according to FSC® and PEFC™, which proves to all stakeholders a strong commitment to sustainable forestry. Customer inquiries for dissolving cellulose produced from FSC® or PEFC™ certified wood is constantly increasing and the aim is always to meet these needs.

Maintained good relationship The philosophy is to continuously maintain and develop beneficial relationships with customers as well as all with other stakeholders. Understanding and satisfying customer needs is the core for long-term successful businesses.

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Innovations Development and innovation, as well as research conducted in close collaboration with other partners like companies, universities and institutes, play a central role. Vital to the product development is to increase the product values to satisfy increasing customer needs.

Social

Safe workplace and safe working environment Domsjö Fabriker believes that healthy and safe employees are vital for operational efficiency and sustenance. The company wants its employees to feel safe to work in the mill, knowing that all their concerns are listened to and addressed at the highest level within the organization.

Following values creates commitment and good leadership It is important to follow values, create commitment and to have good leadership. By following company values, creating common targets and good leadership, Domsjö Fabriker will have a good foundation to stand on when developing the mill’s competitiveness.

Attractive workplace Domsjö Fabriker provides various benefits to its employees to encourage continued association with the organization. The company strives to provide a positive experience for the employees throughout their association with Domsjö Fabriker. It is self-evident to do what is necessary to help its employees to combine work with personal life. It also supports wellness and social activities.

Increase knowledge, education Domsjö Fabriker believes its employees are its greatest strength. The company works closely with its employees to attend to their needs for continuous growth. An introductory program is developed for all in consultation with their respective managers. Role-specific trainings on health, safety and environment topics are also conducted. A minimum of 2 % of the working time is designated for training and development.

IT security IT security is of great importance and is something that is continuously worked with. As a result Domsjö Fabriker is able to maintain a reliable IT environment without losing important information or data.

Materiality assessment is a tool to help the organisation to understand the most important questions to focus on. The most important material topics are handled through the management review once a year and corrective action are taken when required.

X. Performance Disclosures of Key Sustainability Aspects

A. Assessment regarding Domsjö Fabriker’s operations and Sweden’s environmental qulity objectives

Sixteen environmental quality objectives describe the state of the Swedish environment which environmental action is to result in.

During the environmental application process Domsjö Fabriker has evaluated what kind of environment objectives that are affected by its operations, see table 3 below.

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Table 3: In what extent the environmental objectives are affected Objectives that are not considered to or in minor extent affected by Domsjö Fabriker

Objectives (water) that are directly

affected by Domsjö Fabriker

Objectives (air) that are directly affected by Domsjö Fabriker

Objectives that are indirect affected by

Domsjö Fabriker

A protective ozone layer

A balanced marine environment, flourishing coastal areas and archipelagos

Clean air

Good-quality groundwater

A safe radiation environment

Zero eutrophication

Natural acidification only

Sustainable forests

A varied agricultural landscape

Flourishing lakes and streams

Zero eutrophication

Thriving wetlands

A magnificent mountain landscape

A non-toxic environment

A non-toxic environment

A rich diversity of plant and animal life

A good built environment

Reduced climate impact

There are four objectives that Domsjö Fabriker considers as not affected; A protective ozone layer, A safe radiation environment, A varied agricultural landscape and A magnificent mountain landscape. To water it’s mainly nutrients (phosphorous and nitrogen) that effects the objectives. The largest part of the nutrients originates from the feeding of micro bacteria in the biological treatment plant. A lot of focus has been concentrated on minimizing this concentration and the trend is declining.

The water outside Domsjö Fabriker has a long industrial history and emissions from that time can today still be found in sediments and fiberbanks in Örnsköldsviksfjärden and could possibly also affect the quality of the water in general.

For objectives to air, the emission of sulphur dioxide, nitrogen oxide, particles and carbon dioxide are the main parameter that effects the environment. Even if the emissions to air from Domsjö Fabriker affects the objectives no environmental quality standard are exceeded. To air the objectives for good built environment is also affected when it comes to noise and smell. Domsjö Fabriker has started up projects regarding these two parameters and the target is to minimize the emission of them.

Regarding the objectives for reduced climate impact Domsjö Fabriker has a small impact since the use of fossil fuels are almost negligible. The use of the final products could also contribute to a reduced climate impact since cellulose could replace the more resource-intensive cotton, lignin could be used when producing concrete and ethanol could be used as a fuel.

Regarding the objectives that are affected indirect the quality of groundwater is mainly affected by the historical emissions that have occurred and sustainable forests are crucial for the long term operations in Domsjö Fabriker.

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B. Emissions, effluents and waste

1. Emissions to water

Domsjö Fabriker monitors effluents and waste to ensure that the environmental requirements are met and does not negatively affect the environment. Water is a prerequisite for the production and only surface water is used. All care is taken to ensure that water is used efficiently and that effluents are monitored. The total water effluents were 24.5 million m3 during the FY 18. Biological treatment plant and sedimentation basins are used as wastewater treatment. The treated water is discharged to Moälven (river) and Örnsköldsviksfjärden (narrow coastal inlet connected to the Baltic Sea). The emissions discharged to water are shown in the table below, see table 4 below.

Table 4: Emissions to water Parameter Quantity FY15 Quantity FY16 Quantity FY17 Quantity FY18

COD 13,403 tonnes 14,301 tonnes 16,718 tonnes 14,743 tonnes TSS Suspended

911 tonnes 1,062 tonnes 1,192 tonnes 851 tonnes

Nitrogen 190 tonnes 180 tonnes 120 tonnes 108 tonnes Phosphorus 29 tonnes 27 tonnes 19 tonnes 12 tonnes

During the summer 2017 there were a major sinkhole close to the river that resulted in a shutdown of the mill. The sinkhole also resulted in exchanging the pipelines from parts of the mill. Due to immense effort the environmental impact could be highly reduced.

In 2016 a third bioreactor of equal capacity to the existing bioreactors was taken into operation. It has now been running during two years and a lot of the work to optimise the reduction rate has been focusing on nutrients, both phosphorous and nitrogen. The results show a big improvement on the emissions of nutrients, mainly due to improved control of nutrient feeding.

During 2017 a project regarding a new Drum Displacer Washer was started up and that would replace the old equipment. The plan is to have this in place and in use during 2019. This would lead to more efficient washing of the pulp and also less energy consumption and less emissions from this stage in the pulp process.

2. Effluents of water Surface water from Moälven is the main source of water used in the process. In addition water is procured from the municipality for drinking, bath and showers. The total water usage during the FY 18 was 24.9 million cubic meters. The water is reused and recirculated at different stages in the production process. The Moälven River has enough water and no negative impact is known as result of our water withdrawal from the river, see table 5 below.

Table 5: Water sources by type Water source

FY15 FY16 FY17 FY18

River 27 M m3 24.7 M m3 25.6 M m3 24.8 M m3 Municipality 35,045 m3 39,565 m3 30,074 m3 37,254 m3 Total 27.35 M m3 24.74 M m3 25.65 M m3 24,90 M m3

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3. Emissions to air Sulphur dioxide (SO2), nitrogen oxides (NOx) and particulate matter are released from the process to air mainly from the recovery boilers. The lignin dryers and some other sources cause minor emissions. To decrease emissions to air, flue gas scrubbers and electrostatic precipitators are since many years in use. An important part of the cleaning processes is that heat is recovered and used in the process. During 2016 a new gas measurement device was installed. It showed higher emission levels than the old one and therefore measurement results are now more correct. During FY17 additional nozzles for smoke gas cleaning were installed in both recovery boilers as the systems had shown to be undersized. The work to optimise the equipment to minimise the emissions of sulphur dioxide continuous. Table 6 shows the emissions of particles, sulphur dioxide and nitrogen oxides. Table 6: Air emissions by type

Type of emission FY15 FY16 FY17 FY18 Particulate matter * 138 tonnes 133 tonnes 55 tonnes 160 tonnes SO2 ** 375 tonnes 196 tonnes 472 tonnes 563 tonnes NOx ** 337 tonnes 367 tonnes 450 tonnes 448 tonnes CO2 (renewable) 541,930 tonnes

* Uncertain dust measurements, spot-check. ** New devices installed for measuring SO2 and NOx from autumn 2016. The quantity and content of emissions to air is monitored and possibilities to reduce emissions through various initiatives are continuously going on. The total direct greenhouse gas, GHG, emissions during FY 2017-18 amounted to 5,437 tCO2e (tonnes of carbon dioxide equivalent) due to consumption of furnace oil, LDO and diesel, see figure 7.

Figure 7: Emissions to air by each type of fuel. The indirect emissions are due to electricity and steam purchased. In FY18 total indirect emissions were 19,307 tCO2e, see table 7.

4 003 74%

112 2%

1 322 24%

Direct GHG Emissions tCO2e

Furnace oil LDO Diesel

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Table 7: Sources for indirect emissions to air Source of Scope II Emissions Emission tCO2e Electricity purchased from grid (non-renewable) 9,912 Steam purchased from Övik Energi AB (renewable) 9,395 Total 19,307

The GHG emission per tonne of pulp produced during FY 17-18 was 0.12 tCO2, including direct and indirect emissions. Domsjö Fabriker’s Innovation development team, DomInnova, has identified ways to reduce GHG emissions through product applications. For example, lignin can be used as an additive in concrete manufacturing and acts as a water reducer while maintaining the strength of concrete structure. It is calculated that using 1 kg of lignin in concrete manufacturing results in reduction of CO2 emissions by 20 kg, due to reduced demand of cement. Currently Domsjö Fabriker delivers approximately 90,000 tonnes per year to the concrete additive business, which leads to 1.8 million tonnes reduction in global CO2.

4. Solid waste The type and amount of waste is monitored in order to ensure that the waste is handled and treated according conditions set by the authorities. The amount of handled and disposed waste was in total 12,557 tonnes in FY18. The categories of waste generated as well as treatment and handling methods in FY18 are summarized below in table 8.

Table 8: Waste generated by quantity, handling and treatment methods in FY18 Type of waste Quantity FY15 Quantity FY16 Quantity FY17 Quantity FY18

Recovery 11,644 tonnes

5,709 tonnes ** 5,163 tonnes ** 9,076 tonnes

Recycled 681 tonnes ** 758 tonnes ** 320 tonnes Hazardous 419 tonnes 135 tonnes 352 tonnes 440 tonnes Landfill 483 tonnes 2,209 tonnes* 2,832 tonnes* 2,721 tonnes

* Green liquor sludge 1,998 tonnes FY16, 2,465 tonnes FY17, 2,426 tonnes FY18. ** The figures in the sustainability report FY16 and FY17 were switched between ‘recovery’ and ‘recycled’.

C. Energy Work is continuously going on to use energy in the most efficient way. Energy consumption is measured and monitored on a regular basis and work is done to reduce it further. The total steam production amounted to approximately 975 GWh. Additional purchased electricity during the year amounted to 230 GWh and purchased steam from a nearby industry was 156 GWh.

In our biological treatment plant, bacteria break down organic materials into e.g. biogas. Our facility is one of the largest producers of biogas in Sweden. The biogas is recovered and used as energy source for lignin drying and generation of electricity and steam. See table 9 for fuel consumption.

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Table 9: Fuel consumption by type

Fuel Consumption by type

FY15 FY16 FY17 FY18

Purchased fuels Furnace Oil and Light Diesel Oil

12 GWh 14.8 GWh 14.1 GWh 15.0 GWh

Sulphur 39.7 GWh * 39.6 GWh * 38.8 GWh * 38.9 GWh Own-produced fuels Biogas 49.2 GWh 50.3 GWh 52.2 GWh 48.9 GWh Black Liquor Solids 1,210 GWh 1,052 GWh 1,151 GWh 1,245 GWh Total for production 1,311 GWh 1,157 GWh 1,256 GWh 1,348 GWh

*) Updated figures for FY15, 16 and 17. The energy consumption was 6.7 MWh per tonne of pulp produced. Several initiatives to reduce energy consumption, particularly by optimizing steam consumption, have been carried out. Around 96 % of the energy consumption originates from renewable fuels. The slightly higher consumption of non-renewable fuels during FY18 depended on process disturbances, causing the recovery boilers to stop several times and thus oil had to be used to start up the recovery boilers, see figure 8.

Figure 8: The use of oil is almost negligible.

Several improvement projects have been done in FY 17-18 reducing energy consumption by approximately 725 MWh. An in-house expert team of engineers, operators, technicians, mechanics and others has analysed steam and electricity data and identified and implemented solutions for reduced steam and electricity consumption. Some of the identified solutions include investment in new equipment and one includes better use of equipment stored in-house. These actions have resulted in savings of 7 GJ of steam and electricity per day. This steam and electricity saving in combination with 7 % increased production of cellulose has decreased the specific steam and electricity consumption per tonne of cellulose by 11 % over the last five years. See table 10 for energy saving projects.

Fuel consumption by source

Non-renewable

Renewable

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Table 10: Energy saved by energy reduction projects Scheme/Project Source of energy savings Energy savings New heat exchanger Chemical-recovery, steam 290 MWh New equipment for filtering cellulose

Drying, electricity 257 MWh

Smaller pump Bleaching, electricity 178 MWh Total 725 MWh

D. Materials Material consumption is monitored and initiatives to optimize material use efficiency are encouraged. Except from water the main raw materials are wood and sulphur. The table below shows the quantity of material used by type for production of speciality cellulose, lignin and bioethanol during FY18, see table 11 below. All chemicals have to be approved before they can enter the mill. Before approval an assessment is done regarding environmental and health & safety matters.

Table 11: Material used at the mill by type Raw Material FY15 FY16 FY17 FY18 Wood 1.3 M m3sub 1.2 M m3sub 1.2 M m3sub 1.2 M m3sub Sulphur 6,197 tonnes 6,625 tonnes 5,192 tonnes 5,597 tonnes Semi-manufactured goods or parts Sulphur dioxide 18,631 tonnes 19,976 tonnes 18,375 tonnes 16,590 tonnes Sodium hydroxide 31,433 tonnes 31,362 tonnes 30,983 tonnes 27,324 tonnes Hydrogen peroxide 14,089 tonnes 15,544 tonnes 12,978 tonnes 11,257 tonnes

E. Economic Performance Sustainable economic performance is critical for business continuity, maintaining healthy relationships with stakeholders and creating a positive socio-economic impact in the region in which Domsjö Fabriker operates. The economic value generated and distributed by Domsjö Fabriker in FY18 is as in table 12. Table 12: Economic value generated and distributed (kSEK)

Economic Value Generated Revenues 2,114,280 Economic Value Distributed Operating Costs 1,621,831 Employee benefits and wages 292,279 Payment to providers of capital 25,671 Payment to governments 2,322 Community Investments 120 Economic Value Distributed Economic value generated minus value distributed

172,057

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F. Employment Various benefits to the employees are provided to encourage continued association with the organization. Examples of benefits to all employees, regardless of full-time or temporary, include life insurance, disability related benefits, retirement related support, paid holidays (additional to regular leaves), parental leave, marriage leave and bereavement leave. Further full time employees receive benefits related to healthcare services. The company believes in encouraging health and wellness amongst its employees.

In FY18, Domsjö Fabriker had a total of 401 permanent and 11 temporary employees. 24 new permanent employees were recruited and 26 permanent employees left, mainly due to retirement, see also figure 9. All employees employed by Domsjö Fabriker have a labour contract and a collective agreement in accordance with Swedish laws.

Figure 9: Percentage of permanent employees by gender and age.

a) Wellness Many wellness activities have been organised during the year. The employees have been offered to attend dance courses, skiing classes as well as running events. Free lunch seminars have also been offered with a variety of wellness themes.

As in previous years, access to free exercise activities at Brux Sports Centre to all our employees is offered, an opportunity that many use during lunches as well as evenings. It has also been quite popular for the employees to use the benefit of free swimming at Örnsköldsvik swimming hall.

G. Training and Education Domsjö Fabriker regards the employees as its greatest asset and works closely with the employees to attend to their needs of continuous development. An introductory program is developed for each new employee in consultation with their respective managers. The company also conducts role-specific trainings on health, safety and environmental topics. A minimum of 2 % of the employees’ working time is used for training.

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In FY 18 training of permanent employees was 2.3 % of total man-hours which is the normal level for a year. Some of the mandatory trainings for the employees include specific health, environment and safety related topics. Apart from this, introduction trainings for new employees, as well as specific trainings for particular job requirements (essential skills for performing duties), are mandatory. Each manager is responsible for ensuring that the employees have the right type of as well as sufficient training. To make it easier to manage, HR has put great effort to create a training matrix and special proficiencies for each position. By using this system the education need is visualized and training programs can be coordinated between HR-department and managers.

H. Occupational Health and Safety Healthy and safe employees are vital for operational efficiency and sustenance. It is important that employees feel safe at work in Domsjö Fabriker, knowing that all their concerns are listened to and addressed at the highest level within the organization. The company works closely with employees to have optimum representation in various occupational health and safety committees in order to ensure that everyone is heard and solutions are developed to provide a safe working environment to all staff. Indicators related to safe working environment are closely monitored. The occupational health, safety, environment and quality department, HSEQ, monitors and develops systems to ensure a safe working environment. Every accident, first aid, near miss incident and safety observation is documented and reasons, consequences and possible actions are investigated in order to prevent future incidents. Safety audits are conducted every quarter and risk analysis and assessments are carried out periodically. No employee or contract worker faced any fatalities during FY18. The injury rate has improved compared to previous results, see table 13.

Table 13: Safety at work Indicator FY15 FY16 FY17 FY18 LTIFR (Lost time incidents frequency rate)*

15.5 15.0 7.4 6.0

Lost Time Injuries 10 9 5 4 Lost days 292.1 115.2 67.2 82.2 Safety indicator 3.9 8.6 7.5 8.1 * This calculation is made by the following formula; (1,000,000 / number of hours worked in 12 months) x number of accidents in 12 months. * Safety indicator = (Near hit+risk observation)/(lost time accident+zero accident)

Domsjö Fabriker works systematically with working environment according to AFS 2001:01 as well as the Safety management system according to Seveso Directive (Directive 2012/18/EU). The formal agreement with trade unions comprises health and safety topics including regulation of work hours schedule, leave for medical appointments, agreement on sick leaves, rights to holidays and contribution to good order and safety.

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XI. Public relationship events

a) Television show Domsjö Fabriker was the place where the Swedish television show “the world’s toughest job” was recorded. The Swedish television channel called Channel 5 visited Domsjö Fabriker in 2017 to record a show called the world’s toughest job with the famous Swedish television host Carina Berg. In the series, the host get the opportunity to try a variety of tough jobs. During her visit at Domsjö Fabriker Carina Berg worked as an industrial sanitiser for one day at one of the mills entrepreneurs called Delete. As a sanitiser she got to clean the reservoirs at the mill as well as perform so called soot blasting at one of the recovery boilers. The programme was aired in October 2017 to approximately one million Swedish households.

b) Sponsorship Domsjö Fabriker is a proud sponsor of Örnsköldsvik Gymnastics Club and its talented gymnasts. They represent Örnsköldsvik on a high international level. MoDo Hockey men’s and women’s ice hockey teams are also sponsored and the seats in Fjällräven Arena are frequently used for representation. Occasionally seats are available and the tickets are being raffled amongst interested employees, with the privilege to bring also one family member to the game.

In addition a number of smaller local sports associations, with focus on the ones where employees are involved, are sponsored. No individual sponsorships are given, but to a great variety of associations and teams as well as some cultural sponsoring. Domsjö Fabriker has been a sponsor of the Swedish Cancer Society for many years.

c) Recognitions Domsjö Fabriker is the proud winner of the Gender Equality Award 2018. The award was presented by the Swedish Minister for Gender Equality, Åsa Regnér, during the event Industridagen (“Industry day”) in the Swedish town Linköping. The Industry’s Gender Equality Award is given to a company which has implemented significant measures to further gender equality. This prize is awarded by “Industrirådet”, a cooperation between Swedish industry labour unions and business federations. Domsjö Fabriker received the award with the motivation; “longstanding and integrated work with gender equality in a traditionally male environment has positioned itself as a pioneer”. The award has attracted much attention, within as well as outside Sweden.

Domsjö Fabriker has in recent years nominated employees and working groups for various categories of the Aditya Birla Awards. The nominees are invited to a big event in Mumbai, and the winners of each category are announced during the gala event. In addition to the honour, the price consists of a statue and a diploma awarded by Group Chairman Kumar Mangalam Birla on the stage. Joakim Rönström was praised for his successful environmental work at Domsjö Fabriker and was awarded in the "Emerging Professional" category, which is aimed at younger employees employed less than six years in the company. In total, there were about 100 employees nominated in this category.

d) Core Conclave, January 2018 During the Core Conclave meeting in India January 2018, the importance of Domsjö Fabriker in the value chain was mentioned. For Aditya Birla Group, Domsjö Fabriker is one of the keys to be able to build sustainability as a competitive lever. Domsjö Fabriker uses wood from sustainable and

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traceable forestry, processes with low environmental impact to produce a product which is gaining ground comparing to less environmental products. The possibility to produce several products from forest raw material is a big advantage for Domsjö Fabriker as the products can compete with less environmentally sound ones based on fossil fuels. During the meeting Mr Dilip Gaur, Business Head of Pulp and Fiber Business, emphasized the importance of the work going on at Domsjö Fabriker.

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XII. GRI content Index GRI-standard

Disclosure Page number(s) and/or URL(s)

Omission

102-14 Statement from senior decision-maker 4 102-1 Name of the organization 5 102-2 Activities, brands, products, and services 6,7,8,9,11 102-3 Location of headquarters 5 102-4 Location of operations 5 102-5 Ownership and legal form 5 102-6 Markets served 8,9 102-7 Scale of the organization 28,29 102-8 Information on employees and other workers 28,29 102-41 Collective bargaining agreements 28,29 102-9 Supply chain 9,10 102-10 Significant changes to the organization and its

supply chain -

102-11 Precautionary Principle or approach 18 102-12 External initiatives 15 102-13 Membership of associations 15 102-45 Entities included in the consolidated financial

statements 28

102-46 Defining report content and topic Boundaries 5 102-47 List of material topics 18,19,20,21,22 102-48 Restatements of information - 102-49 Changes in reporting - 102-40 List of stakeholder groups 14,15,16 102-42 Identifying and selecting stakeholders 14,15,16 102-43 Approach to stakeholder engagement 14,15,16 102-44 Key topics and concerns raised 14,15,16 102-50 Reporting period 5 102-51 Date of most recent report - 102-52 Reporting cycle 5 102-53 Contact point for questions regarding the report 5 102-54 Claims of reporting in accordance with the GRI

Standards 5

102-55 GRI content index 33 102-56 External assurance - 102-18 Governance structure 10,11,12 102-16 Values, principles, standards, and norms of behavior 10,11,12,13 103-1 Explanation of the material topic and its Boundary 18,19,20,21,22 103-2 The management approach and its components 9,10,14,15,16,22 103-3 Evaluation of the management approach 19,22

Domsjö Fabriker AB SE-891 86 Örnsköldsvik, SWEDEN